Saudi Arabia has begun selling crude oil at discounted prices to buyers in Asia as the surge in global supply increased competition for sellers. This is the first time the oil-exporting giant engaged in a price war
back in 2020.
According to the price list published on Monday, as reported by Bloomberg, Saudi Aramco, Saudi Arabia’s state oil producer, will lower the price of Arab Light oil for next month by $11 a barrel. This will be $1.50 less than the regional benchmark.
This marks the largest monthly reduction in the official selling prices since at least 2000. The last two times Saudis sold oil at a discount were during price wars in 2020 and 2015.
Producers in the Persian Gulf region have increased the flows of oil through the Strait of Hormuz after the US and Iran signed an interim deal. This has put pressure on the oil market and has forced producers to lower their prices.
Interestingly, several Asian crude buyers said, according to the report, that the Saudi prices are more expensive than those of other regional producers in spite of the recent deep price reductions.
In the global oil market, Saudi Arabia has acted as a custodian of sorts. It would increase and decrease oil output whenever it deemed fit as per its requirements.
It has been deft in its attempt at managing the global oil prices as was evident at several times when it reduced oil output to keep the markets in balance. This, it did even as it engaged in price wars twice in the last 15 years.
Recently, the Kingdom has agreed with other nations in its OPEC+ alliance to gradually lift supply quotas.
With the US-Iran peace deal advancing forward, even with little hiccups, Gulf producers have ramped up exports. This is happening just as massive flow of oil is traveling through the Strait of Hormuz.
